BlackRock (NYSE: BLK) is slated to release its Q4 and full-year 2019 results on Wednesday, January 15. Trefis details earnings expectations from the world’s largest asset management firm in an interactive dashboard, parts of which are highlighted below. We believe that BlackRock is likely to miss revenues and earnings estimates for FY19. We expect the company to report a slight increase in revenues year-on-year to $14.3 billion primarily due to growth in Fixed Income Investments and Alternative Investments, although our estimate is marginally lower than the consensus estimate of $14.4 billion. While the EPS figure would have improved to $27.38 mainly due to the reduction in the share count even as expenses trended higher, our estimate is well below the consensus figure of $27.78. Further, we believe that weaker-than-expected revenues and earnings for FY 2019 will very likely result in BlackRock’s stock price falling once earnings are announced. In fact, our forecast indicates that BlackRock’s valuation is $501 a share, which is slightly lower than its current price of $512.

While we expect the growth in assets under management (AuM) for Equity Investments to remain strong, negative economic scenario and government policy uncertainty would more than offset its impact and reduce the Equity Investments’ revenues by 5% y-o-y in 2019.

On the other hand, positive growth in Fixed Income Investments and Alternative Investments segment would more than offset its impact on the top line, enabling the total revenues to cross $14.3 billion by 2019.

Although the Fixed Income Investments division has grown by 15% from $2.7 billion in 2016 to $3.1 billion in 2018, negative bond market conditions are expected to reduce the segment growth rate over the subsequent years, restricting the segment’s revenue to $3.3 billion in 2019.

Further, we expect revenues for the Alternative Investments segment to have grown 9% to cross $1.3 billion by 2019. This would be driven by higher investment advisory fees coupled with improvement in performance fees.

Notably, BlackRock’s revenues have grown by 27% over the last three years (from $11.2 billion in 2016 to $14.2 billion in 2018), however, asset management headwinds are expected to restricting growth and keep revenues at $14.7 billion in 2020

(2) EPS would increase 3% from $26.58 in 2018 to $27.38 in 2019, although it is expected to miss the consensus estimates

BlackRock’s 2019 earnings per share (EPS) is expected to be $27.38 per Trefis analysis, -1.4% lower than the consensus estimate of $27.78 per share

An increase in Revenues as detailed above coupled with a steady reduction in Shares Outstanding will drive EPS growth despite an expected increase in Total Expenses by 1.3%.

As we forecast BlackRock’s Revenues to grow at a slower rate than Expenses in 2019 (1.0% vs. 1.3%), this will result in a slight decrease in BlackRock’s Net Income Margin figure from 30.3% in 2018 to 30.1% in 2019.

For 2020, we believe that an increase in revenues coupled with slightly lower growth in expenses will result in the net income margin figure improving to 30.3%

A trailing P/E multiple of 18.3x looks appropriate for BlackRock’s stock, which is marginally lower than the current implied P/E multiple of 18.4x

Trefis’ forecast for BlackRock’s 2019 earnings, as well as P/E multiple, are slightly lower than the market expectations, because of which our fair value estimate of $501 for BlackRock’s stock is lower than the current market price of ~$512

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